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Senate Narrowly Supports Administration’s Privatization Initiative

Sen. Anthony Pollina (P/D-Washington) argues against privatization of the Office of Risk Management.

The Vermont State Employees’ Association had hoped Tuesday to stop the Shumlin administration from outsourcing work now done by state employees in the Office of Risk Management — but came up two votes short in the Senate.

The Shumlin administration has been exploring whether it could save money if it contracted with a private company to process worker compensation claims and advise on work safety. Secretary of Administration Justin Johnson said state officials solicited information about the cost and services that private companies might offer. The responses suggested potential savings ranging from 35 to 55 percent, Johnson said.

The state subsequently requested bids, he said. The binding offers submitted reflected the same levels of savings, he said. The bids are under review.

The state spends $1.8 million to operate the Office of Risk Management, Johnson said. The office has a dozen employees, he said. Privatizing the operation could save the state at least $500,000 a year.

That is the amount of savings that the Senate Appropriations Committee included in its version of the budget to run state government next year.

Tuesday afternoon, during the Senate’s consideration of the budget bill, Sen. Anthony Pollina (P/D-Washington) offered an amendment to prevent the administration from outsourcing the worker compensation processing until a new panel had studied the pros and cons of privatization.

Pollina argued that the state had experimented with privatizing this work two decades ago, and it didn’t work. “We are really concerned we could end up with another disaster,” Pollina warned. “What we are looking for is to answer the questions before we go forward.”

Speaking before the debate began, Steve Howard, executive director of the VSEA, argued that the Office of Risk Management had never had adequate staff to carry out its work. “It’s the classic pattern,” he complained. “Starve the beast, say it failed and then privatize.”

Pollina noted in an interview that the state auditor had looked at the performance of the state’s administration of its worker compensation program and found it understaffed.

Specifically, the auditor’s 2013 report stated, “Neither WCP nor departments with high claim amounts have consistently implemented processes to ensure that causes of specific incidents are identified and corrected so that they do not recur. Moreover, WCP had only two safety coordinator staff and the departments had limited monetary incentives to address identified weaknesses. Unless the process weaknesses, staffing and incentives structure are addressed, there is no reason to think that the State will see substantially fewer injuries in the future.”

Pollina proposed that the study committee look at whether the administration had acted on any of the recommendations to remedy the shortcomings that the auditor identified.

Senate Appropriations Chair Jane Kitchel (D-Caledonia) urged rejection of Pollina’s study, noting that the budget would end up with a $500,000 hole unless the administration went ahead with privatization.

“It was not an easy decision,” Kitchel said about privatization. For many Democratic senators, it was particularly awkward to oppose the amendment that the state employees’ union wanted.

Nancy Remsen

Senators huddle to discuss the privatization provision in the state budget before voting.

Still, influential Democrats in the Senate joined Kitchel in arguing against Pollina’s amendment.

“If we don’t do this, we will not be able to fund the pay act completely,” Senate President Pro Tempore John Campbell (D-Windsor) declared, referring to compensation for state employees. He appealed to the union to understand that the $500,000 in savings from privatization would help pay for the new two-year contract with state workers, which includes pay raises.

Sen. Rich Westman (R-Lamoille), who serves on the Appropriations Committee, noted, too, that by pursuing privatization, the administration “did what we asked them to do.”

With Howard and other VSEA representatives perched on the edges of their seats, the secretary of the senate called the roll. The tally: 13 votes in favor of delaying and studying privatization and 15 opposed.

By late afternoon, Howard and his team had moved to the House to begin lobbying to block the privatization plan. “They barely won,” Howard argued. “I think that bodes well for our position in the House.”

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